The government has announced it will extend its Start Up Loan initiative, and expand the age range to 18-30 years old, but do entrepreneurs think the scheme will be enough to encourage the next generation?
The prime minister said on Thursday that funding for the coalition's Start-Up Loans scheme was being boosted by £30 million to £110m over three years.
Some 3,000 people are said to have registered an interest in the money and mentoring packages, which are only available in England and being delivered through charities such as The Prince's Trust.
Those whose business plans are deemed "robust" typically receive £2,500 which can be repaid over five years at a relatively low rate of interest.
The Huffington Post UK has been interviewing entrepreneurs since August 2012 about the trials and tribulations they've faced setting up their businesses - interestingly not one of them thought the government had done enough to publicise the loans and how entrepreneurs can apply for them.
Here some of them tell us their thoughts on the Start Up Loan scheme.
Tony Rafferty, chief executive of Printing.com
Few start-up entrepreneurs that we meet are aware of the Start Up Loan scheme. Lifting the age limit from 24 to 30 is progress, but David Cameron needs to remember that today fewer people of 31 years are on the property ladder, and previously property ownership provided 'the collateral' for entrepreneurs to obtain business loans – so why not increase the age to 35?
£2,500 is a reasonable balance between 'making something happen' and risking 'public funds', I started Printing.com with about that amount, today Printing.com turns over circa £23 million.
Rob Law, founder of Trunki
Businesses starting on almost nothing learn the most important lesson; to be thrifty. £2,500 can go a long way these days with many online services driving down the cost of running a business. However, if you need to invest in 'actual' product or build something then this really does not touch the sides. I would like to see a higher second round fund for businesses, those who have proved good use of the initial start-up of £2,500 proving their business model and can raise more.
I would think £5,000-£10,000 is a more realistic number to start off, factor in the cost of the civil service running the scheme and it could almost match each £2,500 loan.
Rachel Wardley, founder of the Tallulah Rose Flower School
I don't know of anyone that knows about this initiative. New start up entrepreneurs are exactly that, new, and therefore don't know where to go to obtain funding other than the banking system. The banking system doesn't inform start ups of any other option for obvious reasons! This initiative needs to be advertised in areas that an entrepreneur would look; Physical media, digital, billboards etc
Putting an age limit on the initiative is crazy. The majority of career change students that enroll on my course are 30 years plus. They have had experience in the corporate world, had a family perhaps and are ready to launch their own business that suits their change in circumstance.
Limiting the finding to 30 years prevents a huge number of experienced would be small business start ups from benefitting. Surely along with young people we need more experienced entrepreneurs that come with age.
A home business would perhaps benefit more from the scheme, with few overheads the start up sum of £2,500 would fund a website and initial marketing costs of business cards, flyers etc. For a business that needs a premises or equipment £2,500 wouldn't go very far.
I would say a start up sum of £5000 would be a more realistic figure...The government say the initiative is awarded to those with a 'robust business plan' - could they not go a step further and evaluate each business individually?
Simon Dixon, founder of Banktothefuture.com
You may be forgiven for thinking that we cannot solve our current debt crisis with more debt, and in most cases you are right. But there is one form of debt that really helps to drive a recovery, and that is loans to business startups and small business. When loans are used to create jobs through startups, the whole economy benefits.
This is a great initiative that hardly anybody knows about. The scheme is a great thing as you can now get some corporate experience, borrow some cash to build a first product prototype, then use this to prove that your product has interest using social media sites on a tiny budget.
This is enough to then go out and raise further finance from investors should the business need it, but it is a lot easier to raise further finance from investors when you have a prototype and proof of interest.
Starting a business has never been cheaper; Access to finance has been made a lot easier through schemes like startup loans and SEIS, investing in private companies has never been easier thanks to crowdfunding, and the risk of investing has been significantly reduced thanks to SEIS. This is more than enough to drive a huge UK recovery if only people knew about it.
Rachel Lowe, founder of Destination Board Games and SheWhoDares.com
I dont think the scheme is marketed enough and the age limit of 30 is very restrictive; it is a shame, as business should be accessible to any age, not just under 30.
I won £3,000 in the Enterprise Challenge at university and that is what I used to set up my games company… it didn't last very long at all! It was only enough to prototype my game and get a few things done. If not enough money is raised at the beginning, the company wont start properly it will be a struggle. I needed around £25,000 to get my products to market.
I always think these schemes are like a lottery; they will do enough to tempt as many young entrepreneurs as possible, but with so little funding available it is likely that more will fail than succeed. The danger is that many young people will get approved for the £2,500, then realise it is not enough, go to the bank to get more, and the bank grants another loan (but with high repayments and high interest, and usually require personal guarantees)... If the business fails these young people get black listed and wont even be able to get a mortgage.
I approached the government some years ago with a scheme which would break the cycle for product based cash flow sensitive businesses. My meeting with the department for business innovation and skills was disappointing. It was just before the new government was elected, and they didn't seem interested in doing anything other than telling me that they have the Small Firms Guaranteed Loan Scheme in place to help companies with this sort of thing. They completely missed the point! A scheme where companies are not getting into debt surely would be a way forward.
Nicko Williamson, founder of Climatecars
£2,500 is not a lot, however for fledgling business ideas it can enable a young entrepreneur to do some market research and provide cash for some resource needed to build a basic business plan.
Limiting the age limit to 30 seems viable, as we are talking about a small loan so it would be reasonable to consider that by 30 most people would be able to have saved £2,500 to seed their business idea. It is under 30's who most likely do not have the funds to start a business.
Crucially once the £2,500 loans have been given to prospective entrepreneurs then they need access to decent mentors, who can help and advise on an informal basis. When I started my business in 2007 I was lucky to access lots of great people who helped and advised me for free, which proved crucial in shaping my business plan and raising the £200,000 initial capital I needed to start.
I'm in favour of light touch government so I don't think the government is best placed to mentor and help young people... In my opinion it is the duty of successful entrepreneurs to give back to the young people who will form the next wave.
Dessi Bell, founder of Zaggora
As a whole, the government's initiatives for supporting business have not been marketed widely enough. There are a number of great initiatives that the government is undertaking but unfortunately not enough is known about them.
£2,500 could cover an entrepreneur for a couple of months of research to develop their product or business idea, potentially it could pay for a small office for a few months outside of London, but most importantly, it could act as a vote of confidence for potential further capital raise at a later date.
I think an even more important area is channelling initiatives to help entrepreneurs fill skills gaps. The funding market for new ideas is fairly active with schemes such as crowdfunding becoming more common for entrepreneurs with the right skills and interesting businesses, but helping entrepreneurs to develop their own skills or to hire others to bring missing skills into a new business is key when you’re looking to grow your company.
Neil Westwood, founder of the Magic Whiteboard
I don't think that many people know about the scheme yet - advertising, marketing and PR need to to channelled at schools and colleges. I have been doing my Skype business talks to schools and most teachers are not aware of the start up loans. I don't think most people know how to get the funding. Social media needs to be used (most young people are on Facebook and Twitter).
Why doesn't the government introduce the start up company to another established local company to help them get started? I would be more than happy to help and advise a new local business. I think the local Chambers of Commerce should be promoting this as well. They could help with coaching and advising.
These loans were designed to help young people so I think the 30-year-old limited is fair, but the scheme should be rolled out much more quickly and to more young people. We need to get this money spent locally in the economy to boost demand.
New businesses spent money, this money would be spent mainly locally in the economy, this boosts the ecomony, increases confidence and needs to more jobs created.
Yes, £2,500 is plently to get you started -I started with £1000. When you have more money you tend to waste it. £2,500 will keep people focusssed on spending money on the right things.
Tony Banks, founder of Balhousie care homes
I do not think the initiative has been publicised enough. It is absolutely integral for the scheme to work, and fulfil its promise of raising opportunities.
It is arbitrary to limit the age; a good idea and plan might be carried out by a entrepreneur who is 24, 34 or 54 years old – age is not the key to success or failure in business. Many people over 30 will have invaluable experience, which would benefit a new business, which is essential for the progress of our economy.
It is vital the scheme prioritises the need to secure business mentors, to offer advice and guidance for new businesses. The experience and insight of others, like myself, who will have faced the same hurdles and issues – and overcome them – is invaluable, and arguably, key to the success of the scheme.